Correlation Between Shinil Electronics and Seoul Broadcasting

Can any of the company-specific risk be diversified away by investing in both Shinil Electronics and Seoul Broadcasting at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shinil Electronics and Seoul Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shinil Electronics Co and Seoul Broadcasting System, you can compare the effects of market volatilities on Shinil Electronics and Seoul Broadcasting and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shinil Electronics with a short position of Seoul Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinil Electronics and Seoul Broadcasting.

Diversification Opportunities for Shinil Electronics and Seoul Broadcasting

-0.16

Correlation Coefficient

Shinil Electronics  Seoul Broadcasting

Good diversification

The 3 months correlation between Shinil and Seoul is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Electronics Co and Seoul Broadcasting System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Broadcasting System and Shinil Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shinil Electronics Co are associated (or correlated) with Seoul Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Broadcasting System has no effect on the direction of Shinil Electronics i.e., Shinil Electronics and Seoul Broadcasting go up and down completely randomly.

Pair Corralation between Shinil Electronics and Seoul Broadcasting

Assuming the 90 days trading horizon Shinil Electronics Co is expected to under-perform the Seoul Broadcasting. But the stock apears to be less risky and, when comparing its historical volatility, Shinil Electronics Co is 4.07 times less risky than Seoul Broadcasting. The stock trades about -0.06 of its potential returns per unit of risk. The Seoul Broadcasting System is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,533,000  in Seoul Broadcasting System on October 7, 2024 and sell it today you would earn a total of  752,000  from holding Seoul Broadcasting System or generate 49.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Shinil Electronics Co  vs.  Seoul Broadcasting System

Shinil Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinil Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shinil Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Seoul Broadcasting System

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seoul Broadcasting System are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seoul Broadcasting sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinil Electronics and Seoul Broadcasting

The main advantage of trading using opposite Shinil Electronics and Seoul Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinil Electronics position performs unexpectedly, Seoul Broadcasting can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Seoul Broadcasting will offset losses from the drop in Seoul Broadcasting's long position.

The idea behind Shinil Electronics Co and Seoul Broadcasting System pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.